EPCG Scheme Allows Zero-Duty Capital Goods Imports; Export Obligation Six Times Saved Duties Over Six Years

The EPCG Scheme under the Foreign Trade Policy 2015-20 allows zero-duty import of capital goods, excluding those on a negative list, with an export obligation (EO) of six times the saved duties over six years, extendable by two years. Imports must occur within 18 months of authorization, and EO is fulfilled in two blocks of four and two years. Authorizations are issued to various exporters, requiring a bond with a 100% bank guarantee, though exemptions exist. Third-party exports are allowed, and installation certificates can be obtained from customs or engineers. Post-GST, imports under EPCG are exempt from IGST and Compensation Cess for physical exports. Domestic supplies to EPCG holders are deemed exports eligible for GST refund.